National Grid Ventures and other activities

Investor Relations | June 2020

National Grid Ventures is a diverse portfolio of commercial energy businesses operating in competitive markets in the UK and the US. The portfolio comprises of long-term assets with a low risk profile and strong cash flows.

Interconnectors

Interconnectors deliver secure and affordable electricity between two markets and will play a critical role in the cleaner and smarter energy systems of the future. They are recognised by the UK Government as a vital tool to manage energy security, costs to consumers and provide long-term sustainability.

As an interconnector owner and operator, we sell capacity on the interconnector to energy traders and provide services for transmission system operators in the UK and mainland Europe. The main interconnection capacity is sold by auctioning capacity based on the price differentials between markets at each end of the link. This represents roughly 80-90% of revenues, with the remaining 10-20% derived from ancillary services.

Overview of National Grid Interconnectors

IFA

BritNed

Nemo Link

IFA 2

Capacity Total length

2GW 70km

1GW 260km

1GW

140km

1GW 240kmNSL 1.4GW 720kmViking Link 1.4GW 760km

Converter stations

UK: Sellindge

UK: Isle of Grain

UK: Richborough

UK: Chilling

UK: Blyth

UK: Bicker Fen

France: Les Mandarins

Netherlands:

Maasvlakte

Belgium: Herdersbrug

France: Tourbe

Norway:

Denmark:

Kvilldal

Revsing

Commissioned Ownership

1986

2011

2019

FY21 est

FY22 est

FY24 est

Partnership with RTE

Joint venture NG & TenneT

Joint venture

NG & Elia

Partnership with RTE

Partnership with Statnett

Partnership with Energinet

Exp. Capex1

~£350m

~£620m

~£760m

Regulatory construct

Phased sharing of profits with customersSubject to a cap

Cap and floor

Cap and floor

Cap and floor

Cap and floor

1. NG share of investment, excluding development expenditure and expressed in nominal terms

Potential interconnection capacity

There are currently 5 interconnectors (5GW) in operation between the UK and European market. National Grid Ventures currently co-owns and operates three of these (4GW) and is constructing another three (3.8GW). A number of studies have suggested that between 15 to 20GW of total interconnection could beneficially exist between the UK and the European market.

Partnerships

Joint ventures

Operating profitCapital investment

Share of post-tax earningsCapital investment

£m 2019

2020

2020

61

64

25

-

-

150

-

-

219

-

-

104

IFA 19

IFA2 128

North Sea Link 100

Viking 5

Renewable Energy in the US

In the US, National Grid is making exciting progress with renewable energy projects to help accelerate our clean energy future.

In 2019 we completed the acquisition of Geronimo, a leading developer of large-scale wind and solar generation based in Minneapolis. The company has successfully developed 2.4GW of wind and solar generation projects since 2004 and has a strong pipeline of projects at various stages of development.

National Grid owns and operates 314 MW of operational wind projects and 111 MW of solar projects that are either in operation or under construction, through our joint venture (JV) with Washington State Investment Board.

In addition to these large-scale renewable energy projects, we also own:

JVs with NextEra that develop, construct, and own large-scale energy facilities on Long Island, NY including:

  • • Two 5MW/40MWh battery storage energy systems under power purchase agreements (PPAs) with the Long Island Power Authority (LIPA)

  • • 23MW utility scale solar project in Calverton on Long Island under development with a PPA with LIPA

  • • 211MW of rooftop solar for 27,835 customers, through our partnership with Sunrun

  • • An option to acquire the offshore transmission for Revolution Wind, a 700MW offshore wind farm for Connecticut and Rhode Island

Metering

We provide installation and maintenance services to energy suppliers in the regulated market in Great Britain. We maintain an asset base of ~9m industrial, commercial and domestic gas meters.

The prices National Grid can charge for certain metering services are currently capped by Ofgem.

Key financials

  • 1. Includes NG Smart

  • 2. Domestic and industrial and commercial meters only

Grain LNG

Grain LNG provides importation services of ship berthing, storage, ship reloading and re-gasification onto the NTS.

Capable of meeting up to 20% of UK gas demand, Grain LNG is the largest importation terminal in Europe, playing a key role in UK energy security of supply.

How we make our revenue

  • • All importation capacity is sold under long-term take or pay contracts, which have an inflationary index linked to RPI.

  • • Customers decide the level and timing of LNG imports and the amount sent out into the NTS. Current customers include BP, Pavillion, Sonatrach, Centrica, Uniper and Total.

  • • We are currently out to market for additional capacity from 2025, including 380,000m3 of associated storage and over 100 berthing slots. This is being made available via a combination of an existing build upgrade (Phase 1) and new build expansion (Phase 4).

Note: Includes Grain LNG and Thamesport

Other Activities

National Grid Property

National Grid Property manages the company's surplus land across the UK. With a diverse portfolio of former industrial or "brownfield" sites, our aim is to return this land back to beneficial use and make a continued contribution to the regeneration of UK towns and cities. We achieve this by working with communities, local authorities, regulatory bodies and leading developers. This includes the joint-venture partnership, St. William, with the Berkeley Group.

Existing property portfolio

  • • 230 sites

  • • Approx. 1,600 acres, with 200 in London and the south-east

  • • Sites of varying sizes and potential values across the UK

St. William joint venture (JV)

  • • National Grid supplies the land into the JV and manages site remediation, holder demolition and plant relocation activities

  • • Berkeley Group contributes the day to day development expertise, from initially securing planning consent, through to on-site construction, marketing and sales.

  • • The JV provides an opportunity to leverage value from the residential development land, and access to downstream profits

  • • A potential for 30 sites under consideration for the JV, with scope for 20,000 new homes

  • • At 31 March 2020, 21 sites had been transferred into the JV, with 9 completed and 12 exchanged

Forecast for the first 9 St. William sites

Phasing of JV profit recognition

Site transferDevelopment completion

Exchange Legal transfer

CY 2016

2018

2020

2022

2024

2026

2028

Battersea

  • • Site remediation

    • • Development & sales

      FulhamRickmansworth

  • • Holder demolition

  • • Kit relocation

    Hornsey

  • • Planning consent

Watford

Borehamwood

Highbury

Oxted

Recognise ½ the uplift in the current land value over the book value as EBIT market comps

in NG Property

  • Recognise our post tax share of development upside in St. William

Poplar

NG Partners

  • • NG Partners is a venture capital fund established to invest in innovative emerging technology start-ups which will provide benefits to our core businesses in the future

  • • As of 31 March 2020, our investment portfolio included direct investments in 17 start-up companies and 4 venture funds, with a fair value of £134 million

partners

Land value determined based on

  • NG Property gradually

    recognise the other ½

    of the uplift based on

    the number of units

    sold

  • Important notice

    This document contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include information with respect to National Grid's financial condition, its results of operations and businesses, strategy, plans and objectives. Words such as 'aims', 'anticipates', 'expects', 'should', 'intends', 'plans', 'believes', 'outlook', 'seeks', 'estimates', 'targets', 'may', 'will', 'continue', 'project' and similar expressions, as well as statements in the future tense, identify forward-looking statements. Furthermore, this document, which is provided for information only, does not constitute summary financial statements and does not contain sufficient information to allow for as full an understanding of the results and state of affairs of National Grid, including the principal risks and uncertainties facing National Grid, as would be provided by the full Annual Report and Accounts, including in particular the Strategic Report section and the 'Risk factors' section on pages 212 to 215 of National Grid's most recent Annual Report and Accounts for the year ended 31 March 2019 as updated by National Grid's unaudited half-year financial information for the six months ended 30 September 2019, published on 14 November 2019. Copies of the most recent Annual Report and Accounts are available online atwww.nationalgrid.comor from Equiniti Limited. Except as may be required by law or regulation, National Grid undertakes no obligation to update any of its forward-looking statements, which speak only as of the date of this document. The content of any website references herein do not form part of this document.

    National Grid plc 1-3 Strand

    London WC2N 5EH United Kingdom

    @Grid_Mediainvestors.nationalgrid.com

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National Grid plc published this content on 18 June 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 June 2020 06:06:03 UTC